Wholesale System

An Expert's View about Business Practices in China

Last updated: 22 Feb 2011

1-2 Wholesale System

In China, the traditional form of wholesaling was single-tiered. However, after two decades of reforms and development, a modernised wholesale system featuring three tiers of market has taken shape. These are commodities markets, regional wholesale markets and central wholesale markets (or state-level wholesale markets).
Compared to traditional wholesaling, the new wholesale system today has very different characteristics.

•Diversified ownership structure. Nowadays wholesalers can be incorporated as collectively-owned, individually-owned, private, joint-stock, and Sino-foreign equity or contractual joint venture. Among these, private wholesale enterprises are growing rapidly.

•Diversified players. Three types of enterprises have become key players in the wholesale sector: first, manufacturers which also act as wholesalers; second, former specialised wholesale enterprises which have developed into wholesale agents or wholesale dealers representing brands; and third, large supermarket chains and hypermarket enterprises which are commanding an increasingly larger share of the wholesale market.

•Diversified forms. There are four major forms of wholesaling: first, manufacturers which wholesale through agents or brokers, or directly wholesale to wholesalers and retailers by means of contract; second, wholesale marts which often deal in both wholesale and retail, they are currently a major wholesale channel for a wide variety of goods especially agricultural sideline products and certain daily-use industrial goods; third, trade fairs where wholesale transactions can take place, these fairs -- which can be general, specialised, national or regional in scale -- are becoming an important platform for wholesale transactions; fourth, online wholesale transactions.

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Posted: 21 February 2011, last updated 22 February 2011

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